May 23, 2011

Waste not: The case for material efficiency

Much of today’s corporate energy, water and carbon management focuses on what happens within the boundaries of an organization. But the larger part of resource use and emissions is often embodied in the material inputs coming in through the supply chain. And yet, this is largely ignored and for practical reasons. Only the largest companies (think Wal-Mart or Procter & Gamble) are in a position to demand environmental scorecards from their upstream suppliers and can force some of them to carry out efficiency improvements.

On the downstream side, manufacturers of consumer products often undertake initiatives to make their packaging smaller, lighter and with higher recycled content. While this is a useful trend and sometimes an easy first step, product life-cycle assessments (including many that we have done) show that packaging is a relatively minor factor in the environmental impacts of most products.

So, how does an average manufacturer, retailer or service provider venture beyond this conventional “realm of the possible”? The answer may lie in managing the use and disposal of materials as rigorously as we have started to manage corporate energy use.

A recent study conducted for Defra (the UK department for environment) calculated that UK businesses could save about $90 billion annually by implementing resource efficiency opportunities in energy, waste and water – with more than 70 percent of the savings coming from waste reduction through process efficiencies, and nearly half of that available immediately at little or no cost. If we were to extrapolate this to the size of the US economy, waste reduction alone could yield annual savings of over $400 billion and cut GHG emissions by about 7 percent.

Opportunities for waste reduction cut across many sectors in the economy. The WellMet2050 program at the University of Cambridge points out that about one-quarter of liquid steel and aluminum never make it into a product and most products could use one-third less metal without loss of performance. Altogether, the potential for reducing metal use is as high as 50 percent.

A recent analysis by the Waste & Resources Action Program (WRAP) showed that nearly $20 billion worth of food and beverages are wasted annually in the UK (including waste at the consumer level), amounting to 3 percent of national GHG emissions on a life cycle basis. Our internal study of US food waste came to a similar conclusion: approximately 2 percent of GHG emissions in the US could be attributed to wasted food. Food waste due to trimmings, spoilage and other reasons can be as high as 10 percent in commercial food service. One of the impediments to cutting food waste is a lack of data on which food commodities are being wasted and in what quantities.

It is also important to recognize that not all waste is equal. When the waste stream consists of many different materials or commodities (as in the case of food waste), the economic values and environmental footprints of the waste components can vary widely. This raises the logical question of how to prioritize waste reduction efforts in order to extract maximum benefits.

Direct reduction of material use and waste is just one part of the efficiency solution. Waste diversion is orders of magnitude larger in terms of material flow but is thought to have much smaller economic value. It is likely that valuable materials in useful concentrations are embedded in waste streams. Innovative services such as RecycleMatch are taking advantage of this and providing marketplaces where waste can be traded as valuable raw material. However, most companies have limited knowledge of their waste composition and how to separate out the marketable portion of the waste stream.

All of this suggests that an analysis of the flow of materials through an organization is the first step in reducing waste as well as re-purposing the unavoidable waste. A manufacturing plant or a company is not very different from a living, breathing organism: It takes in “nutrients” and energy, produces something useful and excretes waste. This idea, captured originally in the theory of industrial metabolism, has largely remained a theoretical concept even as US industrial facilities generate 7.6 billion tons of solid waste each year.

Converting waste from one manufacturing plant into a useful raw material for another also requires the same kind of analysis, but on a larger scale. A recent life-cycle study of a proposed industrial ecosystem sounds a note of caution. When steelmaking dust and slag are converted into raw materials for steel mills and zinc plants, the net GHG emissions actually increase due to the use of carbon as a reducing agent in the conversion of oxide waste to iron. While waste diversion is likely to provide both cost savings and emission reductions in many instances, only a proper analysis can confirm that a specific pathway is capable of delivering both economic and environmental benefits.

If the benefits of waste diversion are compromised by the re-processing steps (as in the above example), it is sometimes possible to bypass those resource-intensive steps. One such case is the recycling of metals, which requires high temperatures for melting – an energy-intensive and expensive process. WellMet2050 suggests that significant opportunities already exist for reuse of construction steel without melting and, if we make the right design choices now, large portions of steel and aluminum could be reused in the future without melting.

Waste diversion does not require producers and consumers of waste to co-locate. The idea of eco-industrial parks never took off on a broad scale because companies choose their manufacturing locations based on business criteria other than waste diversion. Advancing the efficiency of material use will require solutions that use existing markets (including the newer online marketplaces) and transport infrastructures to create looser links between companies in disparate industries and regions. Market demand is already diverting much of the used paper collected on the US West Coast to China. With the right set of analytical tools, waste producers and consumers can identify profitable new pathways for many waste materials that are unused today and most of these will also produce environmental co-benefits.

Radical resource efficiency was a central theme of the ground-breaking book Natural Capitalism more than a decade ago. While we have made advances in some areas, we are still far from realizing any kind of resource efficiency that is game-altering. That opportunity is still out there for companies in a broad swath of the economy.

Kumar Venkat is president and chief technologist at CleanMetrics Corp., a provider of analytical solutions for the sustainable economy.